Pagido Wants to Rid Freelancers of Their Payment Frustration

Pagido Teamfoto_Ulrik Deichsel_David Harnasch_Florian Höppner_von links nach rechts (1) copy
Pagido Teamfoto_Ulrik Deichsel_David Harnasch_Florian Höppner_von links nach rechts (1) copy


UPDATE: David Harnasch started Pagido based on a problem that he recognized during his career as a journalist. When freelance writing, he was always frustrated waiting to receive his pay from his clients. When he became Managing Editor of a publication, he was receiving the bills from freelancers who were waiting to get paid.

Harnasch searched for a tool that could help mediate the payment transaction between companies and freelancers, so that freelancers would get paid on time and companies would receive correctly written bills. He didn’t find one, so he launched his own startup that offers billing and factoring services to freelancers. Together with his co-founders Ulrik Deichsel and Florian Hoeppner, the Pagido team entered the Axel Springer Plug & Plug Accelerator to bring their idea to life.

Pagido caught our attention at last Friday’s Demo Day at the Accelerator, so we sat down with Harnasch to learn more about the startup, the team’s plan for the future and his advice to other founders.

Pagido offers factoring services. Can you explain to us what factoring is?

Of course – factoring is the sale of a bill. Typically, a freelancer writes a bill, then sends the bill, and then waits for his money, sometimes for months. With factoring the bill is not sent out by the freelancer, by a third-party service, i.e. Pagido. Pagido sends out the bill and pays out 80% of the bill amount immediately to the freelancer; 15% are paid once once the other party pays the amount and 5% are kept as a fee for Pagido.

On top of that, the bill amount is insured against “default”, so if the receiving company goes bankrupt, the freelancer will still get paid.

Who are your competitors?


“left”]There are very little direct competitors. Of course, there are companies that help freelancers or small companies with the billing process, such as Easybill or Fastbill, but none of these actually pay out any bill amount in advance. Then there are the big factoring companies, who normally operate from an annual bill volume of more than €500k – out of reach for many small companies and freelancers.

What is your business model?

Pagido is something between an agency and a wholesaler for large factoring companies. Essentially we are processing lots of small freelancer bills and sell them in one big package on to an established factoring company who couldn’t process the small bill themselves.

Pagido works with CreFo Factoring, the Factoring arm of Creditreform, the largest credit rating and collections (Inkasso) company in Germany.

What are you missing?

We are actually quite fine, I must say. We had the first talk yesterday with maybe our first employee, and he looked great. Currently we’re building our operations team; We officially just launched last week and are now very busy optimizing our processes.

Also we’re happy that we found a new office: We are subletting from Project A Ventures and have a deal where we can grow our office space as our company grows.

Furthermore, we’re in the middle of raising our next financing round. The Axel Springer Demo Day was very helpful and we’re now in talks with many excellent investors.

Where do you see your startup in a year?

In a year’s time, we are hopefully established among freelancers in the German market. Currently, we stick to them, because we know what makes them tick and because they are easy to approach. But afterwards, we could start to approach other verticals, such as small companies or move to other countries. Obviously we are also contemplating selling ancillary services such as accounting or tax advice, or other banking services from partner companies.

What is your advice to other founders?

Don’t make yourself dependent on things that you can’t influence. There is always an outside excuse that stops you from starting your business: Legal obstacles, funding, whatever. But you should just start. It is like writing. Just start even if you have writer’s block.

And when you finally do start, move to Berlin. In Germany, there is no ecosystem than here. The city is home to many other startups, accelerators, investors, potential employees, and also a super attractive place to live.

Working with an accelerator has also worked really well for us: I have to admit I was skeptical at first, since I didn’t even know the concept before, and I had no idea what it would be like, but Axel Springer had quite a strong program. We learned so much in these three months, so I would really recommend it to any first-time entrepreneur.

What startup in Berlin do you admire most?

Everyone admires SoundCloud because of its amazing products that everyone uses. Judging other B2B startups is a hard thing to do, because as an outsider you typically don’t understand the industry and the clients those startups operate in. But generally, the B2B SaaS space is quite attractive I think. Think of the amazing rise of, for example.

Image Credit: Pagido